Today, July 30, Ethereum turns 7 years since its launch.
Ethereum prepares for its most radical change: the passage to proof of stake.
Today, July 30, 2022, the day that marks the 7th anniversary of its launch, Ethereum is very different from what it was originally. The network went through several modifications and changed enough that it is not the same today as it was when it launched in 2015.
Its development began in 2013 with the primary idea of Vitalik Buterin, who published the ethereum white paper.
By then, Buterin had been involved in the development and popularization of Bitcoin technology. However, his idea of launching a language scripting (which is much easier to program) for Bitcoin was not accepted.
This led him to create the idea of his own cryptocurrency., in which decentralized applications (dApps) could be developed through smart contracts. The Solidity programming language is the predominant one on Ethereum.
For 2014, its development was launched along with the initial sale of ether (ETH), which would be the native currency of Ethereum, in order to finance the project. 2000 ETH was exchanged for 1 bitcoin (BTC), whose price was around USD 400.
The different changes and improvements that Ethereum had were recorded in EIPs (Ethereum Improvement Proposals). Next, let’s explore some of the big changes from that first Ethereum to now.
The DAO case that led Ethereum to fork
Barely a year after its launch, the first dApps were making their way into the Ethereum ecosystem. Decentralized autonomous organizations (DAOs) were on the rise. These platforms base decision-making on community votes through governance tokens..
Among all these platforms, The DAO was one of the most prolific. He was crowned, at the time, as the crowdfunding with the largest funding in history raising more than USD 100 million (just over 10 million ETH for the listing at the time).
However, it was hacked. The equivalent of $60 million in ETH was stolen from the smart contract that stored the funds.
Buterin himself intervened, since this hack could harm the image of the still young Ethereum network. Buterin’s proposal was based on forking the network. That is, the network would be reversed to a previous point in which the funds were transferred, thus preventing the attacker from keeping the ETH.
The proposal was approved and eventually the network forked. It should be noted that this decision was quite controversial, since it showed that the network was not immutable, and that under the influence of Buterin he could arbitrarily change course.
Such discontent was reflected in the fact that once the network was forked, the original network was maintained by a significant number of miners and people running nodes. It is currently known as Ethereum Classic (ETC).
with the fork, the attacker went from having ETH to having ETC in his wallet, since, according to the rules of the new chain, such a transfer never occurred. The network eventually forked with the hard fork EIP-779known as DAO Fork.
From this point of view, it can be said that the Ethereum that was launched in 2015 is not the same as the one that currently exists, since its block chain was altered.
At the end of 2015, months after the launch of Ethereum, the first token standard known as ERC-20 is proposed. This would be the most popular standard for token creation. Under this format were created, according to data of Etherscan, more than 560 thousand different tokens. Tether (USDT), USD Coin (USDC), and BNB are the most popular.
ERC stands for Ethereum Request for Comments. However, the real acronym would be EIP. ERC-20 is equivalent to EIP-20, but the community has decided to name the token standards under the ERC format.
ERC-20 is a standard that serves both to create security tokens (for example, USDT), and governance. The latter, although listed on the market, have as their main function to grant voting power to their owners on some decentralized application.
With the growth of the ecosystemnew token standards were created, such as the ERC-721. Unlike the ERC-20, the peculiarity of these is that they are non-fungible tokens (NFTs). There is no one equal to another.
NFTs became popular within different areas such as art, and even within video games, reaching millions of players under the concept of play-to-earn games (play to win or P2E).
A variation of both the ERC-20 and the ERC-721 were the ERC-1155, which allow the grouping of transactions lowering costs at the time of being sent, but maintaining the characteristics of each one.
The creation of the Beacon Chain, the future chain of Ethereum 2.0
Currently, Ethereum has two operational blockchains. Although, in practical terms, only one is working (registering the Ethereum accounts). The other, known as the Beacon Chain (chain of beacons) will be part of Ethereum 2.0an evolution of the network that will leave behind proof-of-work (PoW) cryptocurrency mining giving way to staking and proof-of-stake (PoS).
The Genesis block of the Beacon Chain is already active, and was validated on December 1, 2020. Since then, said network has been operational, although the first transaction has not yet been recorded.
The launch of the network allowed to give rise to the registration of the Ethereum 2.0 validators. These will replace the role of the current miners and will be in charge of validating the transactions. Since the activation of the Beacon Chain, validators are validating empty blocks waiting for the fusion either «The Merge»stage that will give the migration from one network to another.
EIP-1559 burns ETH to turn it into a deflationary asset
By the nature of the protocol, ETH is inflationary. There is no coin issue limit. It differs in that from bitcoin (BTC) whose amount is limited to 21 million BTC and there will not be a single one more.
Nevertheless, this growth of ETH will have its limit, and it is that the developers have implemented a function in the Ethereum code that burns ETH. This is EIP-1559 activated in August 2021. Over time, when these burns increase, ETH will be a deflationary asset: more will be burned than is issued.
The function of the EIP-1559 is to take part of the ETH that is given as commission for transaction payment to miners and destroy them.
At the time of this publication, around 121 million ETH are circulating. According to data from the Watch The Burn portal, more than 2.5 million ETH have been burned since the launch of EIP-1559. The more transactions are made on the network, the more ETH will be burned.
Data collected by CriptoNoticias shows how the annual ETH issuance was around 4% per year. However, after the implementation of the EIP-1559, said inflation was reduced, sometimes below 1%. To be considered a deflationary asset, the issue value must be negative.
The price of ETH
The price of ETH has been one of the biggest changes that the etherean ecosystem has had since its launch. The initial presale price for the launch of Ethereum was 2000 ETH = 1 BTC in 2015. With BTC trading above 400 USD, each ETH had an initial value of USD 0.2.
One of the first exchanges to list ETH was Bitstamp, which keeps track of a launch price above USD 2.7, which days later would fall above USD 0.5, as seen in the chart above.
In 2016, ETH would achieve its first considerable historical maximum over USD 16, which would be surpassed a year later, reaching over USD 400. By 2017 it reached a peak over USD 1,400, a milestone that it would reach and surpass in the market. 2021 bullish. At the time of this publication, the maximum price reached by ETH was USD 4,800.